2010 EuroFinance International Cash and Treasury Management Conference: Blog

Publication: gtnews.com

Post 1: A Big SEPA Step Forward? (6 October 2010)
As EuroFinance opens, Ben Poole hears the latest on the announcement of an end-date for the single euro payments area (SEPA) and talks to an insider about the excitement gripping the payments community as a result. 

The first sessions at the EuroFinance International Cash and Treasury Management conference in Geneva revolved around looking to the future, with many of the great and the good from European banking and finance offering their thoughts on what could be coming up in 2011. Following this lead, I had a conversation with Tony Richter, head of business development, payments and cash management at HSBC Europe, about the state of the single euro payments area (SEPA), what it has in store for the year ahead, and why corporates should care. 

Richter told me of the anxious excitement that is gripping the European payments scene currently, with the European Commission (EC) very close to publishing the draft regulation specifying a SEPA end-date. This was due at the end of September but, as seasoned SEPA watchers will know, deadlines are there to be broken. However the good news is that the delay shouldn’t be too long, with the third week of October now pencilled in for this announcement. 

The lack of a SEPA end-date has long been a source of consternation for corporate and banks alike - without a clear plan as to when projects need to be finished, it is inevitable that different parties will approach the task in hand at different speeds. This disjointed approach has hardly been the best advert to corporate for them to embrace the SEPA payment instruments. The announcement of a SEPA end-date can change all this. 

Or, perhaps that should be, the announcement of a SEPA end-date can be the start of a process aimed at changing all this. Once the draft regulation has been announced, all parties with a vested interest in SEPA will be scrambling to interpret what this means in practice, and how the EC will regulate it. 

Once published, the draft will have to be passed by the European Parliament. How long this will take is up for debate - Belgium currently holds the presidency of the EU, and it would undoubtedly be a coup for the country to pass the draft regulation while it is ‘in office’. However, the Belgian presidency expires in December, so this would require an uncharacteristically fast turnaround by the European Parliament. The prospect of the draft dragging through the parliament will dishearten some, but once it does get passed, it is likely that the SEPA Credit Transfer (SCT) will become fully active 12 months after this date, with the SEPA Direct Debit (SDD) following suit a further 12 months after this. 

This will bring the focus that the SEPA project has for so long struggled to achieve. But, in the meantime, there are still challenges ahead - there’s a need for governments vocally to support SEPA migration. The recent example of France switching the vast majority of its public finance payments to SEPA instruments is a lead that others around Europe should be looking to follow in order to boost the scheme. In addition, for many corporates, especially small and medium-sized enterprises (SMEs), SEPA just isn’t as tangible as, for example, the change to using the single currency of the euro was 10 years earlier. The banking and payments industry needs to work hard in order to connect with these companies and make the business case for SEPA. 

One thing is for sure - the draft regulation on the SEPA end-date will be a big talking point at the Sibos conference in Amsterdam later this month.

Post 2: The Rise of Corporate Asia (7 October 2010)
On day two of EuroFinance, treasury practice in the rising Asian economies comes under scrutiny. What are the challenges for western treasurers operating in Asia and how are Asian treasury departments 'leapfrogging' their western counterparts?

Asian market opinions were the order of the day in a panel discussion on the second day of the EuroFinance International Cash and Treasury Management conference in Geneva. Hajeet Kohli from Bharti Enterprises, David Blair from Huawei and Damian Glendinning from Lenovo - based in India, China and Singapore respectively - provided their thoughts on the rise of the Asian economies and corporations. 

Picking up on a theme common in some of the previous day’s sessions, Glendinning made the point that many of the delegates in the hall may find themselves working for a Chinese or Indian company in the near future. This is one example of the rapid corporate growth taking place in Asia. And it’s not only in the talent pool where this growth and competition is being found. Glendinning pointed out that a large number of western corporate are viewing Asia, and China in particular, as a ‘honeypot’ and there is a scramble to become involved and create a presence in these markets. Faced with this competition in their home market, an increasing number of Asian corporates, led by those from China, are rising to the challenge and taking the fight to the west by competing aggressively in these traditional western home markets. Glendinning used this example to illustrate the point that delegates need to understand the fact that perspectives in Beijing on the global economy and corporate world can differ from the perspectives held by those in London or Paris, for example, and that entities in the western world would benefit from trying to gain an insight into these alternative perspectives. 

Blair described some of the challenges of being a western group treasurer of a Chinese corporation. “They call us the ‘grey hairs’," he joked, referring to the young and ambitious domestic workforce that are driving innovation in Chinese corporations and their thoughts on working for slightly older western treasurers. Blair explained how Huawei has to have a very tight set of financial controls in place in the company, with most cash being centralised and not ‘in the field’, something he described as being very necessary when the workforce is young and eager. 

The experiences shared by the panellists painted a picture of a vibrant and fiercely competitive corporate culture rapidly emerging in Asia. Added to this exciting newness of the corporate world, Glendinning related a personal experience of how technology ‘leapfrogging’ is enabling treasury departments in Asia to gain an edge over their western counterparts. Leapfrogging refers to the fact that by and large treasury departments in Asia are unencumbered by legacy systems within their treasury and can implement a brand new cutting-edge system from scratch. When acquiring a part of the IBM business, Lenovo found that, unlike their out-of-the-box SAP system, IBM was hindered by legacy systems. Some of these legacy systems are still being removed today - highlighting how the history of longestablished western corporates can prevent them accessing the best technology available, which can inevitably lead to a lack of competitiveness compared with the new Asian challengers.